Shares of Verisk Analytics, Inc. (VRSK - Free Report) have gained 11.7% so far this year, outperforming the 8.1% growth of the industry it belongs to, and 3.2% decline of the Zacks S&P 500 composite.
Let’s delve deeper into factors that have contributed to the company’s price performance.
Consecutive Revenue Beat
Verisk reported revenue beat in all the four quarters of 2019 as well as in first-quarter 2020. This encouraging performance can be attributed to continued strength in the company’s Insurance segment and improvement in the Energy and Specialized Markets segments.
Robust Organic Revenue Growth
Verisk continues to witness higher organic revenue growth through a combination of an increase in new customers for existing solutions, cross-sale of its existing solutions to customers at present, and also the sale of new solutions. The company continuously seeks to expand its portfolio by leveraging its deep knowledge and position. It develops new, proprietary data sets and predictive analytics after understanding customers' evolving needs. Notably, Verisk has recorded an average organic revenue growth of about 8% in the past 10 years.During first-quarter 2020, revenues went up 5% on an organic constant currency (“OCC”) basis. In 2019, total revenues grew 6.7% on an OCC basis, marking an improvement from growth of 6.1% in 2018 and 5.3% in 2017.
Strategic Acquisitions Bode Well
Acquisitions have also been one of the key growth catalysts for Verisk. The company has been continuously acquiring and investing in companies globally to expand its data and analytics capabilities across industries.
In 2019, Verisk completed seven acquisitions — FAST to enhance its data and analytics solutions in life insurance and annuities market; Commerce Signals to enhance its Financial Services segment; BuildFax to boost its Insurance segment; Genscape to expand its Wood Mackenzie business line’s existing intelligence in energy data and analytics, and to strengthen its research and consultancy across the natural resources sectors; Keystone Aerial Surveys, Inc. to expand its aerial survey services; Property Pres Wizard to enhance its Insurance segment, and Content as a Service business to strengthen its environmental health and safety services, and to extend its global customer footprint and European operations.
Notably, Verisk’s long-term business strategy includes growth through acquisitions. Internally, it is focused on evaluating and integrating acquisitions that are valuable for its shareholders.
Zacks Rank and Stocks to Consider
Verisk currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are DocuSign (DOCU - Free Report) , SailPoint Technologies Holdings, Inc. (SAIL - Free Report) and ManpowerGroup (MAN - Free Report) . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected earnings per share (three to five years) growth rate for DocuSign, SailPoint and ManpowerGroup is 31.2%, 15% and 15%, respectively.
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